Dismissal not termination by mutual consent when employee’s work for specific client ran out

dismissal

In DLA Piper’s case of the week, the claimant successfully argued that he was dismissed when the work that he was carrying out for a specific client, identified specifically in the contract of employment, came to an end.

Francis v Pertemps Recruitment Partnership Ltd

Facts

Mr Francis was employed by Pertemps Recruitment Partnership. The claimant worked with a client of the agency and the claimant’s contract of employment expressly stated that he was being placed with that named client. When the client no longer needed the claimant, the agency gave him the options of:

  • two weeks’ notice, with the agency seeking out fresh work with a view to his entering into a new contract to do that work; or
  • two weeks’ notice, plus a redundancy payment.

The claimant initially chose the first option, later changing his mind and choosing redundancy. It is important to highlight that of none of the agency’s other employees, except the claimant and one other employee, had contracts that specified that they worked for a particular client.

The first-instance tribunal concluded that the termination of the employment was consensual and that no claim for unfair dismissal could be maintained. The tribunal’s reasoning was that the claimant was under no pressure to end the contract. Further, the claimant (and the other employee who shared the term related to working for a specific client) would potentially be dismissed if the work with that particular client came to an end, because in their case neither could assert a right to be moved or to move elsewhere, nor could the agency do so without breaking the provision that the claimant worked for a specific client, unless it had the consent of the claimant to that variation. The claimant appealed.

Decision

The issue for the Employment Appeal Tribunal (EAT) to decide was who had ended the employment relationship. The EAT stated that the two “options” presented by the agency were not in fact options, as both would involve dismissal – albeit one with redundancy pay and one without. The EAT highlighted that the tribunal should have focused not on the employment relationship, but on the contract of employment.

The EAT held that there “was no other conclusion … other than that the contract was terminated and that the agency could no longer honour its side of the bargain”. On this basis, the claimant’s appeal was allowed and the matter was remitted to a fresh tribunal to consider the unfair dismissal.

Implications

Where employers are seeking to argue that employment has terminated by mutual consent, a tribunal will examine whether or not termination was genuinely by mutual consent and whether or not the employee had any choice in the matter.

In the circumstances of this case, a much safer approach would have been for the employer to follow a fair dismissal process if it was unable to find alternative employment for him, rather than seeking to argue that his employment had terminated by mutual consent.

XpertHR guidance on forms of termination

Forms of termination

Letter setting out an agreement terminating employment by mutual consent

If a contract of employment is terminated by mutual consent, is an employee still entitled to claim unfair dismissal?

Jessica Smith

About Jessica Smith

Jessica Smith is an associate at DLA Piper.
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